Chap 14 - back of the chapter

Chap 14 - back of the chapter - Chapter 14 - Partnerships:...

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Chapter 14 - Partnerships: Formation and Operation 16.(10 Minutes) (Compute capital balances under both goodwill and bonus methods) a. Goodwill Method Implied value of partnership ($80,000 ÷ 40%) . ............. $200,000 Total capital after investment ($70,000 + $40,000 + $80,000) 190,000 Goodwill . ........................................................................... $ 10,000 Goodwill to Hamlet (7/10) . .............................................. $ 7,000 Goodwill to MacBeth (3/10) . ........................................... $ 3,000 Hamlet, capital (original balance plus goodwill) . ........ $ 77,000 MacBeth, capital (original balance plus goodwill) . ..... $ 43,000 Lear, capital (payment) (40% of total capital) . .............. $ 80,000 b. Bonus Method Total capital after investment ($70,000 + 40,000 + $80,000) $190,000 Ownership portion—Lear . .............................................. 40% Lear, capital . ..................................................................... $ 76,000 Bonus payment made by Lear ($80,000 – $76,000). ..... $ 4,000 Bonus to Hamlet (7/10) . ................................................... $ 2,800 Bonus to MacBeth (3/10) . ............................................... $ 1,200 Hamlet, capital (original balance plus bonus) . ............ $ 72,800 MacBeth, capital (original balance plus bonus) . ......... $ 41,200 Lear, capital (40% of total capital) . ................................ $ 76,000 14-1
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Chapter 14 - Partnerships: Formation and Operation 17.(15 Minutes) (Prepare journal entries to record admission of new partner under both the goodwill and the bonus methods) Part a. Total capital is $300,000 ($85,000 + $60,000 + $55,000 + $100,000) after the new investment. As Sergio's portion is 25 percent, this partner's capital balance would be $75,000. Because $100,000 was paid, a bonus of $25,000 is given to the three original partners based on their profit and loss ratio: Tiger—$12,500 (50%), Phil—$7,500 (30%), and Ernie—$5,000 (20%). Cash . ........................................................................... 100,000 Sergio, Capital . ...................................................... 75,000 Tiger, Capital . ........................................................ 12,500 Phil, Capital . .......................................................... 7,500 Ernie, Capital . ........................................................ 5,000 Part b. Total capital is $260,000 ($85,000 + $60,000 + $55,000 + $60,000) after the new investment. As Sergio's portion is 25 percent, this partner's capital balance is $65,000. Because only $60,000 was paid, a bonus of $5,000 is taken from the three original partners based on their profit and loss ratio: Tiger—$2,500 (50%), Phil—$1,500 (30%), and Ernie—$1,000 (20%). Cash .
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This note was uploaded on 09/28/2011 for the course ACC 431 taught by Professor Talbert during the Spring '08 term at National.

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Chap 14 - back of the chapter - Chapter 14 - Partnerships:...

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